Is my interest on levy arrears too high?
QI’m in arrears on my levy. I pay R7,000 a month to cover the arrears. In February, the amount outstanding was R60,000, but after I paid R6,600 it reflected that I still owed R57,000. How do I find out if the arrear interest is correct on my account? What is the maximum interest I can be charged? — Name withheld
ANdivhuo Rabuli, acting chief ombud at the Community Schemes Ombud Service, responds:
The legal position in terms of the Sectional Titles Schemes Management Act 8 of 2011 (Management Rule 21(3)(c)) is the following: upon the authority of a written resolution by the trustees, a body corporate can charge interest on an overdue amount payable by a member, provided the interest rate does not exceed the maximum rate payable per annum by the National Credit Act (NCA), compounded monthly in arrears.
This interest rate is 2% a year, which is the interest rate payable on incidental credit agreements.
An agreement between a body corporate and each of its members, which comes into effect when you buy a unit in a sectional title scheme, falls into the category of an incidental credit agreement. It is defined by the NCA as an agreement for the provision of goods or services over time, in terms of which a fee, charge or interest becomes payable if the amount charged isn’t paid before a certain date.
A few criteria must be met before interest can be charged in terms of the act. The trustee resolution must be in writing and signed by the trustees.
Within 14 days of the annual general meeting, the body corporate must give each member written notice of the contributions and charges due for the forthcoming year and state the interest rate payable for any overdue contributions.
Before the promulgation of the act in 2016, the NCA had no bearing on interest charged in sectional title schemes as a result of a 2010 unreported judgment of the high court in Pietermaritzburg in the matter of the Body Corporate of Frenoleen v Dlamini (case no. AR 611/09,11/ 03/2010). ● Send your questions to money@arena.africa